The New Land Law

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Index
Commentary on Section 15
Commentary on Section 17

 

Section 16. Protection of purchasers.

Although this section is headed "Protection of Purchasers" it is not the only part of the Act to provide protection for them. Further, as has been seen, protection for purchasers from persons to whom the trustees delegate their powers is not provided by this Act but by the Powers of Attorney Act 1971. The protection given is limited by the fact that it does not apply to registered land (subsection (7)) and that its main provisions do not apply to purchaser from trustees holding on charitable, ecclesiastical or public trusts.

Sub-section (1) provides that a purchaser of land which is, or has been, subject to a trust "need not be concerned to see" that the requirements of Section 6(5) (the trustees having regard to the interest of the beneficiaries), 7(3) (consent to partition) or 11(1) (duty of trustees to consult beneficiaries) have been complied with. This presumably means that they are not affected by actual notice of the trustees' failure to comply with the requirements of these sub-sections.

If a purchaser has no actual notice of the breach, the conveyance to him is not invalidated by --

  • a contravention of section 6(6) (which limits the wide powers conferred by that section);
  • a contravention of section 6(8) (which provides that those powers shall not be exercised if another enactment prevents them from being exercised in the way proposed). Given that "ignorance of the law is no excuse" it will be interesting to see how the courts interpret this provision.
  • a failure to comply with the provisions of Section 8 (exclusion and restriction on powers). The trustees are under a duty to take reasonable steps to bring the limitation on their powers to the attention of the purchaser but if they fail to do so (and he does not acquire actual knowledge of it in any other way) the conveyance to him is not invalidated by their breach.

Section 17 of the Settled Land Act 1925 provides that where a settlement under that Act has come to an end the Settled Land Act trustees must execute a deed declaring that they are discharged from the trust so far as regards the settled land and sub-section (3) provides that a purchaser of the land is entitled to rely on statements made in such deed. Section 110(2)(e) of that Act provides that a purchaser shall be bound and entitled to assume that the statements contained in any such deed of discharge are true.

It has been a matter of some criticism of the legislation that there has been no corresponding provision in relation to land held on trust for sale. Sub-sections (4) and (5) of the new Act attempt to remedy this, but the new provisions do not go nearly as far as those of the SLA. First, they only apply where the trustees convey the property (in exercise of the powers conferred on them by Section 6) to a beneficiary who is absolutely entitled to it, and second, the purchaser from such beneficiary only takes free of the trusts if he does not have actual notice that the trustees were wrong in believing the beneficiary to be absolutely entitled..

Other provisions protecting purchasers are --

  • The proviso to Section 9(2) (delegation of powers);
  • Section 5 of the Powers of Attorney Act 1971 (revocation of power of attorney); and
  • Section 10(1) (Consent of two sufficient).

    See also Schedule 1, paragraph 4 (purchase of land held on charitable, ecclesiastical and public trusts) and the amendments made by Schedule 3 paragraph 4(7) to sections 24 and 27 of the Law of Property Act 1925.

 


Commentary on Section 17